NEW YORK (TheStreet) -- Last week, I asked the question, "What Will Happen to the Euro When the Eurozone GDP Numbers Come Out?" Well, after waiting a couple of days, we find out that the answer is that the value of the euro drifted a little lower, but nothing dramatic happened.
The day before the new figures were announced by the European Central Bank, the euro closed at $1.3367. The day the numbers were released, the euro closed at $1.3376. Last Friday the euro closed at $1.3392, and yesterday it closed at $1.3346.
So what do investors need to know?
The most notable thing that happened was that the 10-year German bund dropped below 1.00% for a brief time, taking in the information that perhaps the German economy was weaker than had been anticipated. Yesterday, the yield on this issue closed at 1.02%. At the start of this month, the 10-year had been trading around 1.15%.
All in all, nothing much has really taken place in the market up to this point in time.
It appears that investors were not surprised by the GDP numbers announced -- the numbers were pretty much what they expected. The outlook for the future is for some pickup in the economies of the eurozone through the end of the year, but nothing really spectacular.
Furthermore, investors see no surprises coming from the Federal Reserve system, which is winding down its latest version of quantitative easing -- it is on track to finish up in October. Investors are thinking that the Fed will then operate in a way that will maintain calm markets. Nothing has really changed to alter the relative value of the two currencies.
If this is the case, then investors seem to be saying that the eurozone will continue to grow at a slower rate than the U.S. economy. But there will not be much else happening to make them believe that the euro will fall much further in value against the U.S. dollar.
However, a loud cry could be heard calling for the European Central Bank to step up now and introduce some form of quantitative easing.
This, it seems to me, is the uncertainty now hangs over the market.
Will the ECB step in and engage in some kind of quantitative easing to drive down the value of the euro against the dollar and, hopefully, get the eurozone economies to start growing again?
So far, Mario Draghi, the president of the ECB, has maintained a pretty tight discipline on monetary policy. He has overseen a reduction in one of the bank's policy rates into negative territory, but has firmly resisted going any further in the direction of greater ease.
But the pressure is building up. The issue now becomes how long he can hold out.
I get the feeling that Draghi is not impressed with the results the Americans have achieved with their various versions of quantitative easing. There is no information available at this time to indicate that these efforts at quantitative easing have helped the U.S. economy grow more rapidly or produced less unemployment.
But the efforts at quantitative easing have produced substantial distortions within the economy that will have to be dealt with at a later time. Many of these efforts have gone to help those that can invest in assets, physical as well as financial, and have not done much to produce investment in physical capital or other spending that can increase output.
Additionally, Draghi seems to believe that to get real economic growth in the eurozone, countries like Italy and France are going to have to deal with the structural problems that exist within their own economies before "real" growth can actually come about.
In my mind, the pressure is going to build for the ECB to ease further, even if this is not in the long-run interest of the eurozone. And, once there is any sign that Draghi or the ECB is moving to a policy of greater ease, there will be a quick drop in the euro's value.
Right now, I believe that there is more chance that the value of the euro will go down than go up. The will be substantial political pressure to ease policy. There is little expectation that the economy will rebound strongly enough on its own to result in a rise in the value of the euro.
At the time of publication, the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.